ECONOMY

Crude Oil Price May Touch $85 Per Barrel, Says BPCL

Bharat Petroleum Corp. expects crude oil prices to remain elevated in the second half of the ongoing fiscal.

“The price of crude oil is expected to be in the range of $70-$85 till March 2022,” Arun Kumar Singh, chairman and managing director of the refiner, said at a press conference following its annual general meeting on Monday.

Brent crude prices have risen nearly 9% so far this month to $79.12 per barrel as on Sept. 27. That has resulted in higher prices at the pump: while petrol cost remained unchanged in Delhi in the last 21 days, diesel prices were hiked twice since Sept. 24, according to Bloomberg data.

When asked about the impact of electric vehicles on fossil fuel demand, Singh said oil’s share in the energy basket may reduce but growth in oil products will continue for the next 7-8 years. The refiner expects its petrochemicals unit to help mitigate demand risks if adoption of battery-powered vehicles surges. “The demand for petrochemicals is expected to grow at 8-9% for next 15 years.”

Focus On Other Businesses

BPCL is also focusing on other business areas to mitigate risks to its mainstay oil refining and marketing business, Singh said, which also includes gas, electric mobility, consumer retailing and renewables.

The company plans to invest Rs 1 lakh crore over the next five years, with its petrochemicals and gas arms to receive Rs 30,000 crore each. A sum of Rs 18,000 crore each will be allocated to its upstream activities and marketing infrastructure.

Singh hopes demand for diesel would rise as mass mobility—including the slated reopening of schools next month—improves across the country. Demand for gasoline in September is 8-9% higher than in September 2019, but that for diesel is 6-7% lower than the pre-pandemic period, he said.

Domestic gas production rose 20% year-on-year in August, he said. “The current spot gas prices are making gas imports unaffordable for power producers and only the pass-through buyers like fertiliser sector are making gas imports,” he said, implying higher production could spell relief for the country.

The company is confident that its divestment, with an initial target of August 2021, will be completed by the end of the ongoing financial year, although it didn’t divulge reasons for the delay.

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